Sudan's north will continue to use the Sudanese pound after the oil-producing south secedes on July 9, a central bank official said on Thursday, dousing reports that Khartoum may adopt a new currency.
The south voted overwhelmingly to secede from the north in a referendum last month and uncertainty over how the two nations will disentangle themselves has added to an economic crisis that has created foreign exchange shortages, an effective currency devaluation and rising inflation.
Southern Sudanese officials have said they plan to issue a new currency months after secession, but talks on how that would be arranged are still continuing.
On Tuesday, the head of what will become the south's central bank post-secession said the north was planning to pre-empt this move by abandoning the pound on July 9, which analysts said was a threat to gain leverage during the talks.
The Sudanese pound will continue in the north, a central bank official who declined to be named told Reuters on Thursday.
The currency issue has not been settled as yet, but most likely the south will issue its own currency. But until they do so they will continue with the pound until they print the new currency and then begin to dispose of the pound in an organised way that will not damage either side, the official added.
If either north or south abandoned the pound without close coordination it would wreak havoc, with millions of pounds in circulation becoming worthless currency overnight.
The currency shortages have prompted extreme restrictions by the central bank on the import of dozens of goods and on hard cash transfers abroad, leaving many international firms struggling to repatriate profits and halting foreign investment.
On Thursday private Kenyan airline 748, which runs six scheduled return flights a week within Sudan's south, said it was suspending all trips other than charter flights because of the currency woes.
There are no dollars in the market, Janet Too, operations manager at 748 Air Services told Reuters. Every day we were working at a loss, we were losing a lot of money, so we have suspended all the scheduled flights.
Larger airlines like Lufthansa and Emirates are struggling to repatriate their profits and in the absence of any deadline for an end to the restrictions, analysts say some may be forced to cut the Sudan route.